TTB

The Constitutional Issues With TTB's Proposed Alcohol Labeling Rules

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Late last year, the Alcohol and Tobacco Tax and Trade Bureau (TTB) issued a proposed rulemaking to reform regulations surrounding the advertising and labeling of alcohol products. Marc Robertson of the Washington Legal Foundation writes for Forbes about the constitutionally suspect parts of the agency’s proposal:

TTB’s efforts to streamline the rules and finally recognize long-standing First Amendment precedents are welcome. But parts of the proposed rule do not adequately protect the commercial speech rights of alcohol-beverage producers and consumers. We’ll focus here (as WLF will in its forthcoming public comment) on the prohibition of statements on labels or in advertisements that are disparaging, false, misleading, obscene, or indecent…

While the TTB’s proposal would prohibit false speech (unprotected under the First Amendment), it also targets truthful commercial speech that may tend to mislead or offend consumers. This provision accords the TTB a great deal of latitude to subjectively judge alcohol producers’ speech. While there is bound to be discretion and subjective review of any agency regulation, the TTB’s prohibition of certain disparaging statements or indecent labels or advertisements goes too far…

In addition to the constitutional concerns with its vague, subjective standards for alcohol labels and advertisements, the TTB must consider the message such paternalistic rules sends to state beverage control boards, which also review alcohol product labels. Such regulators have taken aim at craft beer names like “Dirty Bastard,” “Backwoods Bastard,” and “Raging Bitch,” as well as label images like a cartoon frog with its middle finger extended. Some of those decisions were successfully challenged under the First Amendment, but states would be better off helping their local businesses than forcing them into lawsuits…

The whole article is well worth a read here.

TTB Considers Changes to Whiskey-Aging Regulations

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While the bulk of alcohol laws reside at the state and local level, the U.S. Treasury Department's Tax & Trade Bureau (TTB) is the entity that sets out the specific definitions of different alcoholic beverages as well as the types of containers permissible for them. According to WhiskyCast, the TTB is considering some significant regulatory changes in the coming year:

Unless you’re in the alcoholic beverage industry, you’ve probably never heard – or cared – about this section of the United States Code of Federal Regulations. However, if you drink whisky, other distilled spirits, beer, or wine, CFR Title 27, Part 5 affects you on a regular basis. It sets out the specific definitions for all alcoholic beverages sold in the United States, along with labeling requirements, marketing restrictions, and everything right down to the size of bottles that can legally be sold in the U.S. It contains the regulation that requires whiskies be sold in 750ml bottles instead of the 700ml bottles used in most other countries, and it’s also where the official definition of Bourbon lives…

The agency issued a Notice of Proposed Rulemaking in the Federal Register on November 26, and is accepting public comments on proposed changes through March 26, 2019… The most controversial proposal so far asks whether an official definition should be created for “oak barrel” that would specify a “cylindrical oak drum of approximately 50 gallons capacity” and whether smaller barrels or non-cylindrical barrels should be “acceptable for storing distilled spirits.” This could have a direct impact on craft distillers, who often rely on barrels as small as five or ten gallons to mature their spirits. The impact could also be felt by distillers who use much larger ex-Sherry butts or Port wine pipes as “finishing” casks, since the TTB’s proposed language does not cover the use of barrels larger than 50 gallons.

"We use 60 gallon (barrels), mostly.is that approximately 50? I don't know," said Jared Himstedt of Balcones Distilling in Waco, Texas. "For a thing that should be supposedly solving a bunch of way overdue problems, it seems like it's introducing some new ones," he said during an interview at WhiskyFest New York.

Richard Hobbs, the owner of The Barrel Mill cooperage in Avon, Minnesota is even more blunt in his objections. "Small barrels have been used for whiskey for hundreds of years. Ruling that a whisky/ey must be aged in barrels of 50+ gallons would be devastating to our customers, who have millions in aging inventory, and would most likely put us and many other cooperages out of business. We currently employ 50 people.I think that innovation, and more options of available oak and other species for aging is a positive for the consumer, not a negative," he said in an email…

Read more about the proposed changes here.

Renowned spirits writer Chuck Cowdery also discusses some of the other proposed TTB changes in a post for The Whiskey Wash.

TTB Signals Enhanced Enforcement Efforts

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The U.S. Tax and Trade Bureau is the primary agency at the federal level that regulates alcohol and enforces trade practice violations. According to Beer Business Daily, the TTB appears to be ramping up its enforcement efforts:

The U.S. Tax and Trade Bureau (TTB), which is the federal agency charged with regulating and taxing interstate bev-alc sales and distributors, issued an industry circular last week basically saying, in our words, "Hey guys, after 75 years, we woke up and are shocked, shocked to find that there are a lot of trade practice violations going on out there …”

The circular goes on to chronicle the most common offenses, mostly tied-house stuff regarding the prohibition of giving stuff of value to retailers, no consignment sales, no slotting fees, and the like…

We've seen a flurry of increased enforcement actions by the TTB in recent months, and this circular seems to point to more aggressive enforcement…

Read more here.